News Taxes

Inheritance and Estate Planning for Individuals and Businesses

Swiss inheritance law has been in force in its revised form since 1 January 2023 and offers greater flexibility through reduced compulsory portions, i.e. a larger freely disposable share for wills and inheritance agreements. This creates more options for distributing assets in a private context. It also facilitates succession planning for family businesses and thereby helps ensure their continued operation.

Case study: Entrepreneur Max Muster

Max Muster (65) lives in Zurich and runs a family business (turnover CHF 5 million). He is married to Anna (62) and has two children: Lukas (35, works in the business) and Sofia (32, does not work in the business). His assets include the SME (operational, not easily divisible) and additional private assets, totalling CHF 8 million, of which CHF 6 million are tied up in the business. Max passes away in 2026 without a will or inheritance agreement.

What happens without arrangements

Without a testamentary disposition, the statutory rules of succession apply: the spouse and descendants share the estate according to the quotas set out in the Swiss Civil Code (Anna receives half, Lukas and Sofia share the other half). For business succession, this often means that the company becomes part of a community of heirs consisting of Anna and the two children, Lukas and Sofia. Without agreement, this can lead to deadlock, forced sale, or liquidation – as even the revised inheritance law currently in force does not contain specific provisions that would automatically facilitate the transfer of the business to one of the children. It is therefore crucial that Max Muster takes proactive measures during his lifetime that reflect his wishes and enable the continued existence of the company.

Current levers (private and business)

Since 1 January 2023, the statutory compulsory portions (for spouse and descendants: each 1/2 of the statutory inheritance claim) can be reduced by half. This results in a larger freely disposable share (50%) for succession planning solutions. This additional flexibility is particularly important in practice for entrepreneurs like Max Muster, as it allows, for example, a larger share of the business to be allocated to Lukas, who works in the company – albeit still within the framework of compulsory portions and matrimonial property law.

Important: In Switzerland, inheritance tax is regulated at the cantonal level and varies significantly depending on the canton and the degree of kinship; in many cantons, direct descendants benefit from preferential tax treatment, while unrelated parties may be taxed much more heavily.

What if: alternative scenarios

Measure no. 1: If Max Muster had drawn up a will, he could use the current freely disposable share (50%) to allocate the business shares more specifically to his son Lukas, provided that the compulsory portions of his wife Anna and his daughter Sofia are respected.

Measure no. 2: If Max had additionally concluded an inheritance agreement (e.g. with Sofia), waiver or compensation arrangements could be planned more reliably, which in SMEs typically reduces conflicts within the community of heirs.

Measure no. 3: If Max had become incapacitated (instead of passing away), a properly established advance care directive could prevent key decisions regarding business management and asset administration from being uncoordinated or controlled by authorities.

It is advisable to seek professional assistance when drafting these documents to ensure they are clear, legally compliant, and less susceptible to challenge.

Typical pitfalls and their consequences

No will or inheritance agreement: Statutory succession forces a division of the business and may lead to disputes or even bankruptcy
Incorrect calculation of compulsory portions: Children/spouse may request reduction (clawback of gifts), leading to legal disputes and estate adjustments
Liquidity underestimated: Compensation payments to co-heirs may effectively block intra-family succession
Cantonal inheritance tax ignored: The tax burden can vary significantly depending on canton and relationship; high taxes may apply to non-relatives
No advance care directive: In the event of incapacity, there is a risk of unplanned intervention and lack of decision-making ability
Pillar 3a overlooked: Previously part of the estate, Pillar 3a assets are now excluded

Recommendations for action

Private individuals without a business: Review/update your will and deposit it with a notary; ensure compulsory portions are correctly calculated
Patchwork families/cohabitation: Carefully structure inheritance agreements and allocations using the freely disposable share, taking into account cantonal inheritance taxes
Entrepreneurs with an active successor child: Define a will/inheritance agreement with clear allocation, valuation and compensation mechanisms, and a liquidity plan (e.g. insurance, financing)
For everyone: Establish an advance care directive and ensure it is accessible (including provisions for business management)

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April 2026